MoD faces double whammy with huge pressure on military budget

The soaring cost of military expenditure will be highlighted this week, casting doubt on the Ministry of Defence’s ability to achieve spending reductions.

With the publication of the controversial defence review less than a month away, official figures for ‘defence inflation’ will underline the huge pressures on the military budget.

In the frontline of cuts: There is a huge pressure on the budget of the military

The most recent such figures released by the MoD cover 2008-2009 and
show this running at an annual rate of 4.1 per cent, one percentage
point above the most recent Consumer Prices Index rate of 3.1 per cent.

Professor Malcolm Chalmers of the Royal United Services Institute,
the defence think-tank, said: ‘What these new figures will show is how
difficult it will be to achieve the defence cuts being discussed.

‘The unit cost of military capability is rising by about two per cent a year in real terms.

‘This means that even holding defence spending flat in cash terms over the next four
years will mean a cut of between eight and ten per cent, so a further
cut in real terms of ten per cent will take that figure closer to 20
per cent, with much deeper reductions
should the real-terms figure reach the 20 per cent that has been mentioned.’

Earlier this year a scathing report from the National Audit Office
revealed the MoD had a ‘multi-billion pound budgetary black hole’.

It said the cost of at least 15 of the MoD’s largest projects had
soared more than £3.6 billion over budget, but the real figure is now
known to have been far higher.